The US dollar has been gaining ground after the upbeat Non-Farm Payrolls report. What’s next?
Here is their view, courtesy of eFXdata:
ANZ Research discusses the USD near-term and medium-term outlook through next year.
“For the USD more broadly, liquidity and risk outlook signals that range-trading is likely to persist. We forecast weakness in the near term, but then recovery later in the year. In a valuation sense, we think the parallel to 1998-99 also looks appropriate and would expect the USD to remain similarly anchored to the top of its valuation band,” ANZ notes.
“Our near-term forecast of limited weakness is based on the relationship between our Risk Positioning Indicator and the USD. Assuming that growth and liquidity stay in the ‘policy stability’ state, we think markets will return to more cyclical assets, most notably equities…
We expect the combination of a better growth environment, stretched (but not extreme) valuation and a high-yield structure will keep the USD rangebound close to its highs with some early weakness, offset later in the year,” ANZ adds.
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